Best Services Hotel (BSH) was established in 1915 by Adelaide Railway near a National Park on Torrens River. In an effort to supplement its lodging revenue, the hotel decided in 2012 to begin manufacturing and selling small wooden canoes decorated with symbols hand-painted by local indigenous Australians. Due to the tremendous success of the canoes, the hotel began manufacturing and selling paddles as well in 2015. Many hotel guests purchase a canoes and paddles for use in self-guided tours of the Torrens. Because production of the two products began in different years, the canoes and paddles are produced in separate production facilities and employ different labourers. Each canoe sells for $500 and each paddle sells for $50. A 2015 fire destroyed the hotels accounting records. However, a new system put into place before the 2016 season provides the following aggregated data for the hotels canoe and paddle manufacturing and marketing activities:

1. Use the high-low method:

(a) estimate the variable costs per unit and total fixed costs for the Canoe product line

(b) estimate the variable costs per unit and total fixed costs for the Paddle product line.

2. Considering the product as a single product:

(a) Calculate the break-even point in units for the Canoe product line

(b) Calculate the break-even point in units for the Paddle product line only.

3. The hotels accounting data show an average sales mix of approximately 300 canoes and 1200 paddles each season. Significantly more paddles are sold relative to canoes because some inexperienced canoe guests accidentally break one or more paddles, while other guests purchase additional paddles as presents for friends and relatives. In addition, BSH spends an additional $30 000 of common fixed costs for a customer service hotline used for both canoe and paddle customers. (a) combined break-even points in units

(b) number of canoes and paddles need to be sold to reach the break-even point.

(c) If both variable cost per unit and total fixed cost of canoe product line increased by 5%, and the sales mix remained unchanged, how many canoes and paddles would need to be sold to earn a desired profit of $96 000?

4. Calculate the hotels margin of safety (both in units and in sales dollars), assuming:

(a) same facts stated above in requirement 3

(b) BSH sold 700 canoes and 2500 paddles in 2017.

Show calculations and workings. Thank you for your help!

\begin{tabular}{|c|c|c|c|c|c|} \hline \multicolumn{5}{|c|}{ Manufacturing Data } \\ \hline 2016 & NumberofCanoesmanufactured & TotalCanoemanufacturingcosts & Year & NumberofPaddlesmanufactured & TotalPaddlemanufacturingcosts \\ \hline 2015 & 250 & $106000 & 2016 & 900 & $38500 \\ \hline 2014 & 275 & 115000 & 2015 & 1200 & 49000 \\ \hline 2013 & 310 & 108000 & 2014 & 1000 & 42000 \\ \hline 2012 & 350 & 122000 & 2013 & 1100 & 45500 \\ \hline 2011 & 400 & 130000 & 2012 & 1400 & 56000 \\ \hline \end{tabular} \begin{tabular}{|c|c|c|c|c|c|} \hline \multicolumn{5}{|c|}{ Marketing Data } \\ \hline Year & NumberofCanoessold & TotalCanoemarketingcosts & Year & NumberofPaddlessold & TotalPaddlemarketingcosts \\ \hline 2016 & 250 & $45000 & 2016 & 900 & $7500 \\ \hline 2015 & 275 & 47500 & 2015 & 1200 & 9000 \\ \hline 2014 & 240 & 44000 & 2014 & 1000 & 8000 \\ \hline 2013 & 310 & 51000 & 2013 & 1100 & 8500 \\ \hline 2012 & 350 & 55000 & 2012 & 1400 & 10000 \\ \hline 2011 & 400 & 60000 & 2011 & 1700 & 11500 \\ \hline \end{tabular}